Annual Report Deluxe Copy 2013-14

8/10/2019 Annual Report Deluxe Copy 2013-14

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Contents

1 Celebrating 50 years

2 The journey of a thousand miles begins with one step.

3 Letter from the Chairman and Chief Executive Officer,International Paper

4 50 years and going strong

6 A vibrant organization

8 A view from the Board

11 Reminiscences of Company veterans

12 50th Annual Report 2014

INTERNATIONAL PAPER APPM LIMITED IS A GROUP

COMPANY OF INTERNATIONAL PAPER COMPANY, USA,

A WORLD LEADER IN THE PAPER & PULP INDUSTRY.

HEADQUARTERED IN HYDERABAD, INDIA, WE PRODUCE

WRITING, PRINTING AND COPIER PAPERS FOR FOREIGN

AND DOMESTIC MARKETS.

Our success comes from aligned, dedicated, highly motivated

people delivering superior value to customers through operational

excellence. It is our mission to become one of the best and most

respected companies in the country - as measured by our

employees, our customers, our communities and our shareowners.


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Our vision and commitment to excellence is the

driving force that seamlessly powers our success.

Ever since our inception as a company, we have

been sailing our way charting great distances an

amassing vast experiences and wisdom. We have

ridden the waves of change, braved challenging

headwinds achieving improvement and success on

our journey. Standing proud at the horizon of

tomorrow, we embrace the challenges and

opportunities to come knowing that our team will

deliver a brighter future for our customers and

shareholders. With core values that make us

responsible corporate citizens, we are committed to

doing the business the Right Way, while making asustainable, measurable difference to the world in

which we work and live.

THE JOURNEY OF A THOUSAND MILES BEGINS WITH ONE STEP.

- Lao Tzu


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International Paper APPM Annual Report 2014 / 3

Congratulations to everyone at International Paper APPM

Limited, on their 50th Anniversary.

We acquired APPM in 2011 as part of International Papers

global strategy to invest in high-potential businesses in

growing markets. Today, our dedicated team in India is

helping us achieve International Papers vision to be one of

the most respected and successful companies in the world.

As we combine International Papers 116 years of

papermaking expertise, manufacturing excellence, safety

culture and focus on sustainable and ethical business

practices with International Paper APPMs local talent and

market knowledge, were building the foundation for a growing and successful business where

people, customers and operational excellence are the focus of everything we do.

Around the globe, International Paper is committed to doing the right things, the right way, for the

right reasons what we call the IP Way. This includes the way we operate our business, how we

serve our customers and how we participate in the local communities where our facilities are located.

We are proud of our IP APPM team for embracing the IP Way and for their many efforts to deliver

economic, environmental and societal benefits in Andhra Pradesh and the surrounding regions.

50 years in business is an important milestone, one not many companies reach. Thank you to every

IP APPM employee who contributes to our companys success today and assuring that our best days

are ahead.

Happy 50th Anniversary!

John V. Faraci

Chairman and Chief Executive Officer

International Paper


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On the banks of the River Godavari at Rajahmundry, a

retired forest officer in 1921 turned dream into reality as he

started a small paper factory making 10 tons per day. The

entity was called Carnatic Paper Mills which in 1964 was

commissioned and incorporated as a new company: The

Andhra Pradesh Paper Mills Limited. In October of 2011,International Paper acquired APPM and this year we

celebrate the Golden Jubilee of our company: International

Paper APPM Limited.

Started from modest beginnings, all of us can be justifiably

proud of what is now better known as IP APPM. Fifty years

may seem a long time, but in the life of a visionary

company, it is a mere blink of an eye. With a good team in

place, the business prospers and every stakeholder

associated with it can be proud of the emerging success.

All of them need to complimented, for they have made it

happen.

Over the decades, the organization has seen improvement

and a measured growth in capacity, revenues and market

position. Today, IP APPM stands as an integrated vibrant

pulp and paper manufacturing company respected for high

quality products and services delivered by some of the

best technicians and professionals in the business.

We are very excited that IP APPM is part of the greater

International Paper family and know that growth and

success are in large part the result of the commitment,

entrepreneurial flair and remarkable spirit of the

Company's employees. I am privileged to be a part of this

IP APPM team since July 2012 and am convinced that we

50 years and going strong

W. MICHAEL AMICK JR. EXECUTIVE CHAIRMAN


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have the most talented employees and a robust

organization that is transforming by focusing on our

Customers, People, and Operational Excellence. Our

team has raised their benchmark to become increasingly

competitive with the quality of our products and services

built on a foundation of reliable, safe, efficient operations.

Our team has a history of making visionary moves to see

beyond today and plan for the needs of tomorrow. In 1989,

IP APPM embarked upon a robust Farm Forestry initiative

to improve the productivity of our forests, increase farmer

economics, and provide a more secure long term supply to

this vibrant industry. With the distribution made by IP

APPM over the last 25 years, one billion saplings were

planted by October 2012 and now stands at 1.25 billion

this year. This Company was also the first to launch

Elemental Chlorine Free paper over a decade ago, the first

of its kind in India.

Our efforts and activities are focused on delivering

superior value that delights our customers in a safe,

cost effective manner that pleases our shareowners.

I am gratified that IP APPM produces the quality our

customers want and stays dedicated to delivering results

through operational excellence. The talented and highly

motivated employees of this company are equally

dedicated to the betterment of the communities throughgood environmental stewardship and personal

involvement in many social and charitable activities.

We are working in a competitive and demanding market.

Our activities may seem complex, but they are being

made simple with a process driven and people oriented

culture with responsibility, respect and attention to detail.

Together, we have a dream, for now and the next 50

years.

IP APPM is on the move, driving results, gaining strength

and building a future. We shall strive to make this

company the most admired and respected company in our

industry. We are on a continuous path of improvement that

will deliver increasing value to our customers and

shareholders in an enriching and rewarding environment

for our employees.

My compliments to everyone associated with IP APPM.

The course for a successful future is set.

Yours sincerely,

W. Michael Amick Jr.

Executive Chairman


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Its time to celebrate. We have an exciting organization that

has stood the test of 50 years; an organization that has

the respect of the customers, employees and local people

for the work they have done; an organization that is vibrant

and is on a growth trajectory; More significantly, an

organization that is committed to contributing part of its

returns to encourage the growth and development of the

wider community.

I am privileged to be associated with IP APPM since early

2012 and feel proud to work along with some of the finest

professionals in the paper industry globally, who foster a

deep culture of accountability, integrity, meritocracy and

excellence and strive to achieve sustainable returns for

our stakeholders. What I see gives me confidence that this

Company will continue to gain strength on its way to

another fifty years to build significant brands and a

successful business. The employees maintain a clear

focus on core competence, customer fulfillment,

commercial discipline and consistent value creation.

IP APPM can do well in the future given the potential of

the market which has one of the lowest per capita

A vibrant organization

RAMPRAVEEN SWAMINATHAN MANAGING DIRECTOR & CEO


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consumption of paper, in a society that has high aspiration

levels. We see a promising future and have strategically

repositioned ourselves over the past two years to enhance

volumes, be cost competitive, and be recognized as one

of the highest quality producer of paper in the country.

As a whole, Team IP APPM is motivated to institutionalizesuperior business leadership, financial discipline,

operational excellence and sound corporate governance.

I was not around to experience most of the first fifty years

of this exciting company. I hope however, to be around to

contribute to create long-term value for our stakeholders.

We shall continue to be consistent with the IP Way,

committed to total quality, with respect for people, both

inside and the community at large. We are working hard to

have a methodical approach that makes environmentalprotection and safety an integral part of the manufacturing

business. We are drawing on over a centurys experience

of International Paper in working in the paper industry to

strengthen all our processes.

This Company may not be the biggest in the industry, but

we remain committed to become the best and the most

admired. Our focus is on reliability and predictability, close

alignment with the needs of our customers, importance of

our employees and commitment to the community. For us

at IP APPM, sustainability is the basis of our stability and

success.

We shall continue to deliver results that meet expectations

and reciprocate the trust of all whom we deal with. I am

confident every stakeholder of IP APPM can look forward

to the next fifty years.

With warm regards,

Rampraveen Swaminathan

Managing Director & CEO


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The Board has been shaping the future of the Company. The Directors remain anchored in investing in the

opportunities ahead, in strengthening our people and systems, and in supporting the wider communities. They

have been inspiring the management to forge a partnership culture with a trusteeship mindset among our

people.

Integral to the ethos of the Company is our value system that puts the institution above self, emphasizes

long-term over the short-term, and aligns employee interests with long-term stakeholder value. The Board

pursues the goal of responsible and transparent corporate governance and control with a view to create

sustainable value and consistently present true and fair view of the operations of our Company.

IP APPM has an enviable Board of Directors with six of the finest professionals from the corporate world as

non-executive, independent directors. They concern themselves with the Companys interests, engage in

intensive dialogue to examine all options that lead to dynamic development, introduce topics of fundamental

importance, assess the corporate risks, forge decisions that adhere to well-calculated and balanced risk, and

secure the long-term sustainability of the Company.

We have now entered our third year since purchasing International

Paper APPM Limited, and I feel good about the progress we have

made. Our safety performance is significantly better, and statistically

speaking, as good as anywhere around the company. Our talent is

much deeper than before. We have hired many new people and have

dramatically improved the diversity and engagement of our team.

Production and revenue are both heading in the right direction and we

have better products in the market and better service to our customers.

Many thanks to Mike Amick and Ram, the IP Leaders and team

members in India, for the great progress. These are exciting times in

India, for IP and for our IP APPM team.

Mr. Thomas G. Kadien Non-Executive Director

Ms. Ranjana Kumar, Non-Executive, Independent Director has seen the

Company closely. From her perspective, its not just the business aspect,

but what is admirable is the sensitivity that the Company demonstrates to

understand the work environment, to improve the life of the workers and

bring in a great deal of professionalism in policies, systems, processes,

and in the dealings with the external environment.

There are several aspects that epitomize the Company according to

Ms. Ranjana Kumar: the importance to brand building; the investment in

product quality; the professional approach to marketing and

manufacturing; the impetus given to growing the market share; the

measured steps towards taking up opportunities, challenges and risks;

importance to enhancing investment in machinery to improve product

quality; the care for employee satisfaction; the concern for transparency

and accountability; and so on.

A view from the Board


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"I have recently been appointed to the APPM BoD and it is a role that I

deeply appreciate, both from a professional and personal perspective.

International Paper is a big company with a rich history and forward

looking mindset. Our presence in India is important and it is very

exciting to be part of this new chapter as we grow and develop our

organization here. IP's well known commitment to people development

excellence will no doubt contribute to the success of the business now

and in the future. On a personal note, - as I was born here and raised in

India -, I have a unique appreciation for the country, its diverse history

and culture and most of all its people. It is wonderful to reconnect after

all these years. "

Ms. Shiela P. Vinczeller Non-Executive Director

Mr. M. K. Sharma, Non-Executive, Independent Director is excited by

the best practices adopted by the Company to bring technology and

know-how and have them assimilated into Indian conditions; the

training provided by subject matter experts on pulp, chemical usage,

waste reduction to create an outstanding knowledge management to

drive competencies; and the deep rooted commitment to the

community.

In fact, IP strives to take ownership of the neighborhood and integrate

with the society; the pioneering work that is being done in farm forestry

to create productive assets for the farmers on their marginal lands; the

relentless focus on safety, lost time and the need to reduce

environmental footprint; the deep understanding of the market and the

investment being made in product mix and customer satisfaction; and

several other initiatives.

The Company is fifty years old, but the excitement and vibrancy is of a

young organization that is charting a planned future.

The best is yet to come according to Mr. Praveen Kadle, Non-

Executive, Independent Director. IP APPM team has worked hard on

asset utilization, cost optimization, operational efficiencies, and working

capital management; significantly reduced the carbon footprint; brought

in best practices in all processes; and raised the benchmarks on

transparency, accountability and corporate governance.

International Paper has transformed this Company into a high

performance company. He is confident that the Company has been

galvanized for start of another fifty years.


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There is a new sense of ethics at IP APPM, says Mr. Milind Sarwate,

Non-Executive, Independent Director. The US based parent has been

a game changer. They have introduced an organized way of doing

business, earnestly streamlined the functions and processes, brought

in expertise to improve productivity and have targeted long-term

return.

The focus is on people, on organizational excellence, on cost of

goods sold rather than on topline. The Company is leveraged to do

what is right, on integrity, on having the right people, on domain

knowledge and be a company of choice.

There is a remarkable transformation in the past two years, says

Mr. M. S. Ramachandran, Non-Executive, Independent Director.

There is a cultural shift in terms of management, about compliance

standards, in creating organizational enthusiasm and in doing

business the IP way. The Company is being aligned to global

operating standards and creating an ethos of good governance. There

is a calibrated way to expand capacity, increase volume, cost

compression and improving earnings. IP APPM is being readied for

longer-term growth.

There is a new confidence in the Company by inspiring people to

deliver to their potential. IP APPM is at a take-off stage says

Mr. Ramachandran and will do much better than it ever did in the first

fifty years.

Mr. Adhiraj Sarin, Non-Executive, Independent Director visualizes

sustained improvement in the future, since in several ways, this

Company has seen de-bottlenecking: in capacity creation, in operational

excellence, in governance standards and in making the Company a

well-oiled machine. International Paper has inspired the people with

ethical and compliance standards, with the best benchmarks in the world.

There is value addition through the Company, end-to-end.

This fifty year old Company is poised for remarkable change with several

interventions, says Mr. Sarin, such as people policies, their training,

performance appraisal standards, accountability levels, safety norms and

the impact being made on the environment, technology process

knowledge. He believes this Company has had a culture change and has

raised the bar for performance standards.


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Our quality was well-accepted by the

market. Every APPM employee was

held in high esteem and we were

always a preferred employer.Competitors of APPM gave

preference to our employees

because at any time, we had the best

technical skills; always, we have been considered a good

training ground by our competitors!

- Mr. K. M. Kasetty

General Manager, Kadiyam Unit

Employees have had good relations

with each other and hence, several

suggestions are given and taken.

Employees themselves have shown

interest in raising the quality of

products. Even outside the factory

premises, employees have

volunteered to do community work, on behalf the

Company. A childrens park was created at Annavaram,

contributed by the Company and employees participated

as volunteers.

- Mr. J. B. Prasad

Paper Machine Process

Reminiscences of Company veteransWe have always been privileged to

have strong technical staff, capable

of making varieties of paper. The

middle management has beencompetent and committed. The

diversity of our employees has been

a factor in our commercial success.

No one is disadvantaged because of religious beliefs,

gender, origins, language, age or for any reason.

APPM employees are respected outside the mill, since we

have gone the extra mile to do social work representing

the Company. We even renovated a crematorium and

added facilities such as running water, seating

arrangements and beautified it with plants. The place now

looks like a park!

- Mr. S.S.N. Dora

Human Resources

APPM always carried credibility. The

Company was respected by

Rajahmundry town for being a good

citizen and the employees benefited

by this good image. We did plenty for

society such as donations to schools,

equipment purchase assistance for

hospitals, scholarships for poor children.

- Mr. S. V. V. Reddy

Assistant Manager, R&D

People looked forward to working

days, to return to their shift duties

after the weekly off-days. Seniors

listened to us and respected our

opinions; a shop floor worker was

heard and his suggestions taken.There has been mutual respect,

between management and employees, especially since

1987.

- Mr. V. Gangadhar

Stock Preparation Department

Product quality has improved over the past two years; In a

commodity market, Andhra Paper is sold by brand name;

they offer tailor-made products for specific order

fulfillment; very professional in their approach; deliver on

their commitments; communication is always complete.

- Mr. Rajeev Baldwa

Shree Santosh Marketing, Distributor

In the paper industry, Andhra Paper is considered

dependable. The Company staff is interactive, give

flawless quality, and execute all orders in the time that we

have ordered.

Mr. R. G. Prasad, Pancom Marketing

Distributor

Very clean and professional approach to business; best in

the paper industry in the country in almost all aspects;

Company has made changes to improve their credibility.

- Mr. Sridhar Bang

Sampath Kumar Bang, Distributor


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50th Annual Report 2014

Contents

13 Board of Directors

14 Letter from the Executive Chairman

18 Letter from the Managing Director & CEO

22 Responsible management

26 Added to the value chain

28 Talent Management & Development

30 Societal commitment

33 Corporate Information

34 Directors' Report

43 Management Discussion & Analysis

59 Report on Corporate Governance

68 Independent Auditors' Report

74 Balance Sheet

75 Statement of Profit and Loss

76 Cash Flow Statement

78 Notes forming part of the Financial Statements


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BOARD OF DIRECTORS Sitting (Left to right):Ms. Ranjana Kumar, Mr. W. Michael Amick Jr., Ms. Shiela P. Vinczeller.

Standing (Left to right): Mr. Praveen P. Kadle, Mr. Adhiraj Sarin, Mr. Thomas G. Kadien,

Mr. Michael Baymiller, Mr. M.S. Ramachandran, Mr. Milind Sarwate, Mr. Rampraveen Swaminathan,

Mr. Kenneth P. Huelskamp, Mr. M.K. Sharma.


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Gaining Momentum

Dear Shareowners,

During 2013-14, we enhanced the growth profile of the

Company, improved the efficiency of our operations and

delivered improved financial performance. I am pleased

that we grew our organizational capabilities through

investment in our people, introduced new products, got

closer to our markets and raised our safety standards and

performance. The focus throughout the year was on

people development, customer contact, operational

excellence and sustainable solutions.

With a deeper understanding of our markets and customer

applications, we invested our efforts, on transforming

potential into opportunities, for our customers. We knew

what they need, and gave them what they want, when they

want. Overall, we improved the quality of our products,

launched high-end copier grades and added to our

reliability factor with every customer.

As with any operating year, last year presented some

unique collective challenges. We experienced further

deceleration in GDP growth together with inflationary

expansion. In addition, we had continued cost pressures

on account of raw material supplies within an overall soft

economic environment. The team at IP APPM stood up

well to external pressures and raised the operating

efficiencies, worked on cost compression and created a

platform to take advantage of the growing demand in the

coming years.

We must continue to make significant progress in those

areas that we can impact and control: I am pleased that

LETTER FROM THE EXECUTIVE CHAIRMAN

W. MICHAEL AMICK JR. EXECUTIVE CHAIRMAN


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our IP APPM team did just that! IP APPM today therefore

is better than what it was a year ago, and far better

equipped to meet the excitement of the future.

We have made comprehensive efforts to establish the

Company in new growth markets, introduced value added

products that have the potential to create a niche in the

market, enhanced the level of efficiencies, created a

safety culture and increased the level of employee

engagement. This was a year of significant progress in

IP APPMs journey to produce and deliver excellence in

paper manufacturing to meet customer demands. Both

sales and margins were improved through the year,

quarter-over-quarter. Yet, I would hasten to add that we

have made only the beginning.

The efforts of the year made an impact. The year ended

with a momentum that will lead us into the new financial

year as a vibrant, dynamic and competitive company with

an improved platform to drive future profitable growth. In2014-15, our three key corporate objectives would build on

the momentum gained so far.

The first strategic objective is to optimize and improve our

operations, providing capacity and revenue growth to meet

the expanding needs of our customers and markets. The

second priority is to focus on achieving sustainable, best-

in-class product quality while driving continuous

improvement through all of our processes. We shall strive

for exceptional customer experience and, in their eyes, be

known as one of the easiest companies with which to do

business. We can achieve all these only when we stay

focused on our third objective; to increase employee

engagement by creating a safe, challenging work

environment where ALL team members have an

opportunity to contribute to their full potential and are

valued for their opinion.

Across the globe, at International Paper, people are the

most valuable asset and primary driver of our business.

It is their relentless pursuit of excellence in all that they do,

to serve the customers, to offer the best in products and

services, which makes for our superior competitive

strategy. Here at IP APPM, we have invested in our people

to ensure that we have the appropriate talent with the right

tools and skills to take the Company forward. Our people

are empowered to speak their mind, held accountable for

their performance to help create an environment that

facilitates individual and organizational growth. As a result

of the increasing process discipline and focus on results

based performance, each day there is a growingconfidence in our ability to meet the challenges ahead.

The team has charted a clear improvement strategy, has

ensured that we have products that are in demand and is

confident of execution capabilities.

In line with International Papers best practices, the

Company insists on creating and maintaining a safe,

healthy work environment. We have laid a foundation for

value based culture that would help carry us forward to a

higher level of success. Results matter. But we have also

made it clear to our people that production and profits can

never be ahead of safety or at the cost of the environment.

The efforts of the year made an impact. The year ended

with a momentum that will lead us into the new financial

year as a vibrant, dynamic and competitive company with

an improved platform to drive future profitable growth.


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Safety is a core value in the Company: simply stated,

priorities must shift over time as the challenges and

circumstances dictate, but VALUES NEVER CHANGE!

Our team members are keenly aware that their safety and

the safety of the team is everyones responsibility. I am

proud that we have significantly improved the personal

accountability and safety standards at IP APPM and

equally proud that each and every team member knows

the job is not yet done.

As an organization, we respect the environment and have

a never ending process of continuous improvement. For

us, environmental conservation is an investment in the

future. Our focus on operational excellence, in particular,

emphasizes the efficient use of raw materials and process

chemicals, enhancing material efficiency, conserving

energy and water, minimizing emissions and consciouslyreducing waste throughout our operations.

We strive to add value to the communities and

neighborhoods where we live and work to make a

meaningful difference to the lives of people. IP India

Foundation, which we have set up, has been initiating,

encouraging and supporting various projects directly or

through employee engagement programs. This is not only

achieved by imparting skill development and training

programs, but also by making financial support available in

terms of grants, subsidies etc. The Foundation

encourages and supports non-conventional & renewable

sources of energy systems, including rural electrification

projects. It is also actively involved in providing assistance

during relief & rehabilitation of the populace affected by

natural calamities.

The Foundation has been promoting & propagating farm

forestry programs with emphasis on conserving natural

resources, creating healthier environment and massive

plantations on marginal & degraded farm lands. This helps

in sustaining needs of farmers by providing them with the

means of generating indirect employment and uplifting the

socio-economic conditions of the villagers and tribal

communities.

This Company has undergone tremendous change and

evolution over the past 50 years. We have reinforced the

existing solid foundation and we should be excited about

our next 50 years. We have done well over the past fifty

years. What we have achieved gives us motivation. But

what needs done, inspires us. We have created a

momentum in the Company that will add traction as we

move ahead and institutionalize success over the next fifty

years. We are fifty years old, but I believe we are only just

getting started.

I am grateful for the commitment and support of our team,

the APPM Board of Directors, our customers and the

communities where we operate. They give me confidence

to look to the future.

Yours sincerely,

W. Michael Amick Jr.

Executive Chairman

Our focus on operational excellence, in particular,

emphasizes the efficient use of raw materials and process

chemicals, enhancing material efficiency, conserving

energy and water, minimizing emissions and consciouslyreducing waste throughout our operations.


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WHAT WEVE

DONE

Introduced value added products

Enhanced level of efficiencies

Created a safety culture

Increased employee engagement

WHAT WERE

DOING

Optimizing operations to enhance revenue

Achieving best-in-class product quality

Inspiring employees to contribute to potential

WHAT WELL

DO

Grow volumes, revenues & margins

Improve market share

Expand offerings in W&P segment

Be the low cost producer in the industry


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Building the Foundation

Dear Shareowners and Employees,

In 2013-14, we continued on our five year journey of

building the foundation for the future. We continued to

meet our performance goals to position IP APPM as a

leading supplier of premium grade products in the Indian

market and enhance our competitive edge. It was a year of

proving and strengthening our strategy of growth, setting

long-term goals for success, giving priority for people over

systems and forging ahead despite challenging times.

We pursued our corporate goal to be the most reliable

manufacturer and brought in operational excellence to the

table to improve productivity, adopted better practices

around safety, environment, people management and

customer care, and all that the 115 year old IP has stood

for. We created a performance culture.

The macros of the economy were daunting. Despite the

prevailing external environment, our team managed well to

produce 210,584 MT in a 12-month financial year as

against 258,202 MT in the previous 15-month period; sold

208,089 MT during 12-months ending March 2014 as

compared to 279,093 MT in the 15-months ended March

2013; earned a better Net Sales Realization per MT over

the previous period due to upward price revisions across

all grades and a change in the product mix; recorded

EBIDTA of `73.98 crore for the year under review as

against `138.77 crore in the previous 15-month period;

and, closed the year with a loss of `41.61 crore primarily

LETTER FROM THE MANAGING DIRECTOR & CEO

RAMPRAVEEN SWAMINATHAN MANAGING DIRECTOR & CEO


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due to longer outage at Unit:Rajahmundry, rupee

depreciation, adverse fiber price and product mix and

delay in consents.

Several areas were prioritized in the year:

Become the low cost producer;

Strive for customer support excellence;

Focus on safety, environment and productivity & create

world class operations;

Optimize footprint to grow in printing and writing

segment.

Given the challenges in raw material sourcing and cost

trends, it was imperative that we managed to reach out to

farmers and improve on our procurement, stay competitive

and ensure a pipeline for today and tomorrow. We went

further in our extension work to encourage farmers to plant

high yielding varieties by distributing larger quantum of

saplings and extending the touch points to support and

guide them to plant better.

Simultaneously, we worked to improve process reliability

and debottleneck the operations; increased the speed in

paper making machine, reduced coal consumption per ton

of product, lowered energy consumption and reduced

finishing losses. We improved the overall machine

efficiencies (OME) and reliability levels, while continuously

raising the safety standards at both the production units.

We have invested about `120 crore in a sheeter unit

during the year. It is up and running and we have made an

impact on the high-end copier market. We have also

managed to improve paper and pulp productivity,

technology, and in creating an environment where our

employees are able to achieve things they are capable of

doing.

As in the previous year, we put a premium on safety

culture. Everyone became accountable for safety of self

and each other. Awareness level was raised by making

safety a core issue for everyone, whether employees,

contractors or visitors. We successfully completed the

2013 annual outage with zero incident. In just one financial

year, we brought down Total Incident Rate (TIR) by 47%

over the previous year. During the same period, we

managed to lower Lost Work Incident Rate (LWIR) by

50%. However dramatic this achievement may seem, our

aim is to strive for zero incident, and we are at it.

Similarly, we take our responsibility to protect the

environment very seriously. There is constant attention to

reduce environmental impact by upgrading our

equipments and processes. Our eco-efficient processes

have helped cut costs associated with materials,

chemicals, energy, water, emissions and their disposal.

Our efforts at raising the operating efficiencies have

helped reduce material usage and to lower the cost of

production. For instance, we managed to reduce power

cost by 150 basis points over the previous financial period.

We pursued our corporate goal to be the most reliable manufacturer andbrought in operational excellence to the table to improve productivity, adopted

better practices around safety, environment, people management and

customer care, and all that the 115 year old IP has stood for.


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We are constantly striving to be the lowest cost producer

in the industry, to excel in customer support, improve

material efficiency, manage world-class operations while

staying focused on safety, environment and productivity, to

expand our offerings in the writing and printing segments

and overall be the best resource in the paper industry.

Today, we have excellent bandwidth and quality of

management and employees to deliver results. We have

invested adequately in people, since we are entirely

dependent on the strength of the talent base. We

encourage fast decision making, continuous learning and

customer focus as part of our need to grow sustainably.

We have a team that we all can be proud of and I amgrateful for their commitment and dedication.

It is important to IP APPMs future that employees are

continually motivated and inspired. It is vital to the

organizations effectiveness and long-term success.

Motivation and inspiration is achieved by allowing

individuals a great deal of freedom to set tasks, perform to

their potential and create new paradigm. We are clear in

our organizational goal. We want to be the best-in-class in

whatever we do.

Looking ahead, I am sure, we can do better. We need to

grow our volumes, revenues, margins, bottom line and

Our aim is to improve market share and maintain strong

profit margins and we are already gaining traction, in the

first quarter of the new financial year.

generate stronger returns. Our priority on safety and

environment will continue, even as we are raising our

accountability throughout the Company to achieve best-in-

class operations. The message throughout the

organization is clear: we shall work for zero incident

culture.

It is with confidence and enthusiasm that we approach the

task of building for the future. There is resurgence in the

economy. Growth in demand for our products, driven by

underlying expansion in population, literacy and aspiration

levels of people, improvement in per capita incomes will

translate into rising demand for paper.

We see growth opportunities and have clear goals. Our

aim is to improve market share and maintain strong profit

margins and we are already gaining traction, in the first

quarter of the new financial year. We intend to seize the

opportunities and grow our business. Confidence in our

organizational strengths makes us optimistic for 2014-15.

With warm regards,

Rampraveen Swaminathan

Managing Director & CEO


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Safety

Through the financial year 2013-14, we had a continued

focus on safety culture with specific attention to:

Behavioral patterns

Leadership engagement

Process

Equipment

PPE awareness and compliance

The mill safety leadership team takes clear responsibility

for all mill wide safety efforts and works cohesively as a

team to address and resolve safety and health concerns.

The leadership team engages all employees in safety

efforts, tracks performance, coordinates mill recognition

systems and systematically communicates with all

employees. This level of attention to detail is extended to

safety performance and compliance standards and

procedures of contractors. In fact, the Company makes no

distinction between the safety of our employees and that

of our contractors.

A few specific action points initiated and achieved were as

follows:

Successfully completed 2013 annual outage with zero

incidents;

LIFE project plan implemented;

Implemented health and safety accountability

standards;

Implemented performance standards;

Written procedures developed; all works are being

performed under the umbrella of the mills Safety Work

Permit Scheme;

Involved all employees in safety suggestions

competition during National Safety Day celebrations;

Conducted refresher training programs for all

employees;

Involved line management in safety by initiating

leadership walk through inspections, cross functional

audits, safety committee meetings, etc;

Conducted training programs once a month to allsenior staff on LIFE focusing areas/standards;

Conducted tools, tackles, material handling

equipments and pressure vessels testing and

inspection by competent persons;

Improved positive safety culture;

Conducted safety audits with external experts.

Accident reduction is strengthened through our Life-

Changing Injury and Fatality Elimination (LIFE) program

that we successfully completed in 2013. This program

fosters safety improvements and sets even stronger

standard of performance. By evaluating and eliminating

hazards and through LIFE learnings, we achieved

dramatic improvement in our performance in 2013-14. The

two key performance indicators Total Incident Rate (TIR)

and Lost Work Incident Rate (LWIR) were brought down

Responsible managementWE CONTINUALLY REVIEW OUR OPERATIONAL PROCESSES TO STRENGTHEN

OUR SAFETY TRACK RECORD TO ERADICATE THE CAUSES OF INCIDENTS, IN THE

BELIEF THAT EVERY INCIDENT IS PREVENTABLE. THE AIM IS TO ACHIEVE AND

MAINTAIN THE HIGHEST STANDARDS OF HEALTH AND SAFETY PERFORMANCE AT

OUR OPERATIONS.


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during the year over the previous period. We

brought down Total Incident Rate (TIR) by 47%

(from 0.56 to 0.30) and Lost Work Incident Rate

(LWIR) by 50% (from 0.34 to 0.17).

The culture we seek to create at IP APPM is one of

continuous improvement. We are also conscious that

cultural and educational issues tend to influence

employees perception of safety, which entails that we

need to find rigorous ways of addressing underlying

causes and inculcating a safety culture. One thing is

certain. We need to be alert all the time. Creating and

maintaining safety record is no accident.

Sustainability

Pulp and paper manufacturing, by its very nature, present

complex sustainability challenges. Our processes are

energy and water intensive. Nevertheless, despite the

complexities, paper manufacturing can be conducted in a

way that is economically, socially and environmentally

sustainable over the long run.

The Company recognizes its responsibility to protect the

environment by conserving usage of natural resources,

minimizing waste, recycling chemicals, water and other

resources and by lowering emissions in to the water, soil

and air. Raising the efficiency in operations would

inevitably help lower waste generation and carbon

emissions and more important, compress costs. The

sustainability strategy is hence integrated into our day-to-

day practices, business planning, risk management and

cost control procedures. In effect, sustainability practices

help us deliver the full potential on our performance

standards.

For instance, we at IP APPM, utilize energy efficient

production processes and updated technologies to

produce pulp and paper. We use the lignin (high calorific-

value black liquor), which constitutes approximately half of

the fiber that we consume, to fire the boiler to generate

steam and power. Wood bark & chip dust is fed to coal

fired boilers to conserve coal. There is hence,

considerable reduction in use of fossil fuel in the

manufacturing process.

Every year, we have been progressively reducing material

consumption. Recovery percentage of the chemicals used

is as high as 97.5% i.e. only 2.5% needs to be added

afresh to a new operation. Water per ton of product

produced in 2013-14 was reduced by 7.35% as compared

to the previous financial period.

With our aim to achieve the Companys environmental

targets, a few of the initiatives taken up at the production

facilities in 2013-14 are as follows:

Process & flue gas stacks are provided with

electrostatic precipitators to purify gaseous emissions

before release into the atmosphere. These stacks are

for coal fired boilers, rotary lime kilns and recovery

boilers. On-line continuous stack emission monitoring

equipment has been installed and emission

parameters such as suspended particulate matter,

sulfur dioxide (SO2) & NO

xare being recorded and

transparently connected to the website of the

regulatory authorities.

Fugitive emissions such as non condensable gases

are incinerated in furnace such as recovery boilers/

rotary lime kilns at elevated temperatures to nullify the

pollution and odor.

Critical pollution indicating parameters, such as COD

& BOD for final treated effluent, is meeting stipulated

norms prescribed by regulatory agencies. Effluent

Total Incident Rate47% improvement

0.56

2012-13: January 2012 to March 2013 2013-14: April 2013 to March 2014

0.302012-13 2013-14

Lost Work Incident Rate50% improvement

0.34 0.172012-13 2013-14


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treatment plant performance increased in 2013-14 in

respect of COD & BOD when compared to 2012-13.

There is a reduction of COD by 8% and BOD by 23%

compared to 2012-13. Waste water discharges are

monitored and the release concentration to

environment is thereby reduced.

Sewage treatment plant of 1,200 KLD capacity has

been commissioned for the neighboring Mallayapet

township, in order to treat the domestic waste waters

before letting into common municipal drains as part of

our corporate social responsibility.

New drinking water treatment plant of 2 MGD capacity

commissioned with enhanced technology by providing

activated carbon filters and sand media filters.

Eliminated hazardous & risky gases, elemental

chlorine usage with liquid hypo for disinfection of

drinking water.

Biological process treatment unit enhanced by

construction and commissioning of additional capacity

aeration tank with 616 diffusers.

The environmental laboratory was renovated to carry

out day-to-day monitoring of various pollutants.

High efficiency, maintenance free, oil free turbo blower

installed for new aeration tank instead of lobe blowers.

It is the first of its kind ETP application in use in India.

The sustainability strategy is integrated into our day-to-day

practices, business planning, risk management and cost

control procedures.

As a process, we evaluate and minimize risks systematically by responsible business practices.

In particular, we focus on the environmental impact of our production process to ensure that our

operations are always in harmony with nature.


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For an integrated pulp & paper manufacturing company,

fiber is at the beginning of the value chain. Wood is the

primary raw material and yet all responsible paper

companies encourage farmers to plant trees as part of

their sustainable approach towards humankind.

The Company recognized that the pulp and paper industry

would face challenges in the sourcing of fibrous raw

materials and embarked in 1989 on an ambitious plan to

generate the raw material by coordinating with farmers to

utilize their barren, marginal and degraded lands. This

pioneering step marked the commencement of the farm

forestry plantation activities, and was a turning point in the

history of the Company.

This program provides a means of survival for the small

farmers, and improves the socio-economic status of their

communities. More significant, since wood can be used

only after it is adequately grown for around 4 years, there

are far more trees planted than what are used by the

paper industry. The industry has been at the vanguard to

promote farm forestry and sustainability.

2013-14 was characterized by a perceptible scarcity of

wood. There were supply bottlenecks and increasing

competition that put pressure on costs. IP APPM with its

concerted efforts, in a stiff competitive environment, was

able to meet 100% requirement of pulpwood from farmers

and that too primarily within 350 kms radius of the

production unit at Rajahmundry in Andhra Pradesh.

Approximately 93% of the requirement of pulpwood used

was the fast-growing Subabul, Casaurina and Eucalyptus.

Added to the value chainIP APPM IS DEVELOPING HIGH YIELDING, GENETICALLY SUPERIOR CLONES OF

CASAURINA AND EUCALYPTUS TO MAXIMIZE PLANTATION PRODUCTIVITY AND

REVENUE GENERATION FOR THE FARMERS.


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IP APPM distributed 204.8 million quality saplings

(including 5.3 million clonal saplings) during the year,

which covers a plantation area of 28,019 hectares, as

against development and distribution of 161.30 million

seedlings covering an extent of 22,975 hectares in the

previous 2012 planting year. Spread over 184,000

hectares, IP APPM has created a pool of about 91.75

million man-days especially in rural areas so far, since

1989.

Research on clonal development has resulted in

introduction of high yielding, disease resistant clones that

are versatile to a wide variety of agro-climatic conditions in

inland and coastal areas. The beneficiaries are provided

planting material at extremely subsidized rates. The

scheme has been widely accepted and adopted by the

rural people and is now held as the benchmark in

plantation activities.

IP APPM is developing high yielding, genetically superior

clones of Casaurina and Eucalyptus to maximize

plantation productivity and revenue generation for thefarmers. The wastelands of the past have become the

means to employment and asset creation for the farmers

while improving forest and ecological systems.

The productivity of degraded lands has improved

tremendously since the inception of the social farm

forestry program, and soil erosion has been controlled.

There has also been an visible improvement in moisture

conservation.

Keeping in view the growing need for fiber, additional

thrust is being given to enhancing area under farm forestry

and selecting second generation Casuarina clones, which

will help the farmers to achieve higher yield per acre than

the existing Casuarina clones, ultimately resulting in better

returns to farmers and additional fiber from the same area.

Research and Development has been taken at a wider

perspective through a collaborative project with Institute of

Forest Genetic & Tree Breeding, Coimbatore, Tamilnadu.

We are introducing more farmer-friendly demonstration

plots and other cost reduction measures in qualitative and

quantitative production processes.

It is gratifying to realize that the farmers holding barren,

marginal and degraded lands have been able to convert

them into productive lands by taking up high yielding, short

rotation planting stock. The farmer economics hasimproved, his value chain stands enhanced, while for the

pulp and paper industry, there is greater visibility of raw

material security in the foreseeable future.

204.8 28,019Million quality saplings distributed Hectares plantation area covered

During 2013-14

91.75 184,000Million man-days created Hectares plantation area covered

Since 1989


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The Company operates with integrity towards theemployees, sets high standard of business conduct and

behaviors that protect human rights and safety in the day-

to-day management. As a team, we strive at all times to

understand and meet expectations of customers, business

associates and other stakeholders.

IP APPM embodies values which are deeply rooted in

openness, integrity, tolerance and respect for all, all of

which are integrated in business activities. It is part of the

Companys identity and philosophy to offer its employees

a fair and safe working environment. The Company

recognizes that people generate economic value in

whatever they do, seek personal development and hence

the leadership encourages the employees to perform to

their potential and mutually agreed responsibility.

Good and safe working conditions are actively created

which work as enablers for individual and organizational

success.

There is a continuous and consistent effort undertaken tobring a culture of excellence and a culture of quality. The

Company relentlessly examines its processes, to be the

best in the business and to minimize any possible

potential hazard for the employees and the society.

Our people focus on excellence will get us higher

volumes, rising revenues, better capacity utilization, cost

compression and higher margins. Higher capacity

utilization willenable usto spread ourfixed costs across

the product lines. Individuals are being motivated to

contribute towards cost control, productivity and team

work, with quarterly recognitions. We are striving for a

period of sustainable growth, where primacy will be safety

of people and assets and respect for environment.

Emphasis during the year was to create high potential

employees at every level and provide them with the

support and tools they need to develop into our future

Talent Management &

DevelopmentWE ARE STRIVING FOR A PERIOD OF SUSTAINABLE GROWTH, WHERE PRIMACY

WILL BE SAFETY OF PEOPLE AND ASSETS AND RESPECT FOR ENVIRONMENT.


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team of skilled employees and business leaders. We

invested in creating a learning organization to enable

every employee to work to his or her full potential and

continuously develop and refine their technical,

operational and management skill sets. Successful

realization of IP APPMs business strategy is built on their

growth and ability to deliver.

All IP APPM employees participate in the process of

setting objectives to measure their own performance.

During the year, we introduced mandatory career and

development worksheets (CDW) across the senior staff of

the organization to ensure career management andsuccession planning. All career movements are to be

made based on CDWs and every employee also receives

regular annual performance reviews.

As part of employee engagement, we undertook the task

of ensuring efficient, effective and scalable core processes

and systems across the organization through project GPS

(Global Processes and Systems). Another initiative was

the mandatory one-on-ones between managers and

employees as an outcome of the Global Employee

Engagement Survey. Competency assessments have

been completed for all senior managers. There is a more

agile workforce, with fair amount of interchangeability in

locations and functions.

IP APPM has a structured and strategic approach to

develop leadership capabilities at various levels within theCompany. There is an emphasis on succession planning,

to foster and manage good employee relation and change

management across the Company.


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For International Paper, contribution to society is integral

to business. IP APPM supports a range of local activities

committed to projects that support education, safety,

environmental protection, health and social affairs.The Company listens to the community members to

understand their needs, concerns and perspectives.

As part of its corporate societal involvement, the Company

works closely with the local communities to deliver longer-

term outcomes that benefit people in their neighborhood.

Because our employees and their families are part of the

wider community, IP APPM has a large band of volunteers

who understand and respect the societys needs and

participate to offer meaningful support to the projects.

IP APPMs involvement is an article of faith, to engage

employees with a passion, to make a positive impact on

the lives of people who need assistance. International

Paper gave an impetus to this movement in 2013-14 by

setting up the IP India Foundation to ensure a structured

way to contribute to the society.

IP India Foundation has been initiating, encouraging and

supporting various initiatives directly or through employee

engagement programs. This is not only achieved by

imparting skill development and training programs, but

also by making financial support available in terms of

grants, subsidies etc. The Foundation encourages and

supports non-conventional & renewable sources of energy

systems, including rural electrification projects. It is also

actively involved in providing assistance during relief &

rehabilitation of the populace affected by natural

calamities.




plantations on marginal & degraded farm lands. This helpsin sustaining needs of farmers by providing them with the

means of generating indirect employment and uplifting the

socio economic conditions of the villagers and tribal

communities.

Employee engagement within the Company is more of a

volunteer led effort. From teaching young students about

the importance of education, demonstrating zebra crossing

for their safety, painting of school walls to cleaning of

colonies, distribution of alternative energy lamps and so

on, our employees have both organized and participated inseveral projects.

The Company also partners with organizations to support

their programs through financial contributions or in-kind.

For instance, the Foundation has joined hands with WWF

in conducting census at the national parks to help the

wildlife department to arrive at certain conclusions

regarding the population of different animals, their density,

distribution and the presence of different types of flora

across the jungles.

Local community focus of IP APPM includes several

projects, a few of which are listed below:

Project 100aims to build the educational future of

India brick-by-brick by addressing the need for better

educational infrastructure and building the tangible

asset of schools. The project aims to create a friendly

and enabling atmosphere for children at the zilla

Societal commitment

IP APPMS INVOLVEMENT IS AN ARTICLE OF FAITH, TO ENGAGE EMPLOYEES

WITH A PASSION, TO MAKE A POSITIVE IMPACT ON THE LIVES OF PEOPLE WHO

NEED ASSISTANCE.


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parishad schools by ensuring drinking water, lights and

fans, benches, desks and chairs, books and

stationary. The school authorities are sensitized to

conserve water through rain water harvesting pits

within the school premises, encouraged to plant trees

and improve the infrastructure within the school. Ten

schools have been identified under project 100 for

developing rain water harvesting pits to recharge the

ground.

Project kShitijais an initiative to distribute solar

based study aids to students studying in class 10 in 27

schools covering 7 districts of Andhra Pradesh

predominantly in the forest region where there is acute

power shortage.

As part of the initiative towards women empowerment,

vocational training is imparted to enhance the skill and

train women and adolescent girls not only in stitching

and embroidery, but also to impart value education.

Every 6 months, a batch of 30 students graduate and

10 students who have completed their 10thclass also

get certificates from the government.

Livelihood and social skill development program is a

project to enable and empower differently abledpersons to live an independent life. IP APPM team

played a crucial role in generating support through

collective action and provided training to the disabled

children. Candle making and training classes to make

paper bags were organized for the specially abled

children to support their livelihood.

IP APPM passionately protects the environment in all

areas of its operations to balance environmental,

social and economic needs. This approach has served

the society well. As part of our efforts in the area of

sustainability and community development, the

Company assisted in construction of a check dam to

store rain water to benefit around 150 arches of

assigned land at Tantikonda village.

Through the Green Wave Campaign, IP APPMemployees spearhead and promote awareness among

the school students on importance of plantation and

recycling by conducting quiz, debates and other

activities.

The Company recognizes that community members

are prone to water borne diseases and need sanitation

facilities in the villages adjoining the banks of River

Godavari. Provision of safe drinking water by IP APPM

has been a boon to the villagers, supported by two

overhead structures, one for community water usageand another for the safe water through reverse

osmosis. Employees of the Company have been


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creating awareness amongst the villagers on the

importance of drinking safe water and the necessity to

maintain hygiene. This has motivated the community

to ensure that everyone at household, school and

balawadi drinks safe drinking water and keeps the

community clean.

Provision of piped safe drinking water to the residents

in and around the mill area is another initiative of the

Company that meets the needs of several hundred

households.

Local artisans living in the farm forestry areas work on

their age old crafts making traditional toys as their

occupation. They need support. IP APPM with its

project Ekko-talz promotes their potential, provides

marketing linkages and adds to their visibility with the

result they have enhanced their skills for making

innovative craft products for the modern consumer.

There is sustainability, certainty and better living for

the artisans through this move.

In order to develop a high-performance culture among

the employees, we have designed employee

engagement in the community they live and work.

Under this project, the employees volunteer during

disasters such as flood and fire accidents, support

local government schools, contribute in cash to aid




plantations on marginal & degraded farm lands.

child education, create awareness on health through

skits and stories, join hands to distribute solar lamps

to the school students in and around the forest areas,

voluntarily work for construction of check dam and rain

water harvesting pits within school premises, conduct

painting competition etc. Employees of IP APPM

experience fulfillment through such life enhancing

activities.

IP India foundation is committed to provide quality

education with improved infrastructure at the APPM

Model School at Rajahmundry. The School provides a

healthy physical, mental and spiritual atmosphere, so

that the roots of our ancient culture and traditional

legacy are well-preserved through academic exposure

and spiritual ventures. This results in integration of

Indian culture, and knowledge to suit the present day

needs and values. The children are encouraged to be

alive to their surroundings.

Towards enhancing their skills, teachers were involved

in learning computers, attending training workshops,

preparation of teaching materials and models,

importance of ethics and compliance standards.

Saplings have been planted in and around the mill and

other areas by employees who have pledged to nurse

the plants, protect the environment and save the Earth.


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Corporate Information

ANDHRA LEAD TEAM(As on May 1, 2014)

Mr. C. Prabhakar

Senior Vice President (Corporate Affairs) &

Company Secretary

Mr. Jaspal Singh

Senior Vice President (Sales & Marketing)

Ms. Jayashree Satagopan

Senior Vice President & CFO

(upto April 30, 2014)

Mr. V.V.B. Vasantharao

Senior Vice President (Operations) &

Mill Manager

Mr. Atanu Chakrabarti

Vice President (Supply Chain)

Mr. Deepak KhareVice President (Forestry)

Mr. P. Sreenivas

Chief Information Officer

Mr. Badrinath Chellappa

Vice President & CFO

(from May 1, 2014)

Mr. V. Srinivasa Rao

Associate Vice President (HR)

Mr. Yogesh Jain

Associate Vice President

(Purchase & Commercial)

Mr. Joseph Vinod Kumar K.

General Manager (Legal)

Ms. Seema Nallani

General Manager (CSR)

Registered Office

Rajahmundry - 533 105

East Godavari District

Andhra Pradesh, India

Phone: +91 883 247 1831 to 1834

Fax:+91 883 246 1764 & 301 3000

Corporate Office

Krishe Sapphire Building,

8th Floor, 1-89/3/B40 to 42/KS/801,

Hi-tech City Main Road, Madhapur,

Hyderabad - 500 081

Telangana, India

Phone: +91 40 3312 1000

Fax: +91 40 3312 1010

AuditorsDeloitte Haskins & Sells,

Chartered Accountants

Hyderabad

Cost AuditorsNarasimha Murthy & Co.

Cost Accountants

Hyderabad

BankersState Bank of India

Canara Bank

Axis Bank Limited

Bank of America N.A.

Citibank N.A.

BNP Paribas

JPMorgan Chase Bank N.A.

WorksUnit:RAJAHMUNDRY

Rajahmundry - 533 105

East Godavari District,


Phone: +91 883 247 1831 to 1834

Fax: +91 883 246 1764 & 301 3000

Unit:KADIYAM

Industrial Area, M R Palem - 533 126

Kadiyam Mandalam,

East Godavari District,


Phone: +91 883 245 4651

Fax: +91 883 245 3538

Websitewww.ipappm.com


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Directors' Report

During the financial year ended March 31, 2014, your

Company recorded:

a. paper production of 210,584 MT as against 258,202

MT for the previous 15 month period ended

March 31, 2013;

b. revenue of `1091.65 crore from net sale of paper as

against `1230.50 crore for the previous 15 monthperiod ended March 31, 2013;

c. sales of 208,089 MT as compared to 279,093 MT in

the fifteen month period January 2012 - March 2013.

Your Company managed to get a better Net Sales

Realization per MT over the previous year due to

upward price revisions across all grades and a

change in the product mix;

d. export volume of 16,748 MT as against 37,819 MT

for the previous 15 month period ended March 31,

2013. There was substantial increase in sales

realisation per MT over the previous period;

e. EBIDTA of `73.98 crore as against `138.77 crore;

f. a loss of `41.61 crore in view of longer outage at

Unit: Rajahmundry, rupee depreciation, adverse fiber

price and product mix and delay in consents. The

outage, completed without any LIFE incident, resulted

in quarterly downtime of 24 hours in recovery boiler.

The critical issue of electric overhead travelling

cranes in respect of Paper Machine # 2, 3 & 5 was

addressed by renovation.

Dividend

In view of loss, your Directors decided not to recommend

payment of dividend on the equity shares for the financial

year under review.

Subsidiary company

During the year under review, IP India Foundation was

incorporated under Section 25 of the Companies Act, 1956

as a Private Limited Company on June 20, 2013. The

entire share capital of `5 lakhs is held by the Company

and its nominee and therefore, the IP India Foundation is

a wholly-owned subsidiary of your Company. A statement

of particulars of IP India Foundation under Section 212 ofCompanies Act, 1956 is provided in this Annual Report.

The Ministry of Corporate Affairs vide its General Circular

No.2/2011 dated February 8, 2011 granted General

Exemption under Section 212 (8) of the Companies Act,

1956 to companies from attaching accounts of its

subsidiary companies in its Annual Report subject to

fulfillment of certain conditions prescribed therein. The

Board of Directors of the Company at the Meeting held on

Financial Results

Your Directors have pleasure in presenting the 50th

Annual Report of the Company and the Audited Accounts

for the year ended March 31, 2014.

The financial performance of the Company for the year

under review is summarized in the table given below:

`Crore

12 Month 15 Monthended ended

March 31, March 31,

2014 2013

Sales and other income 1104.90 1253.62

Earnings before interest,

depreciation & taxation (EBIDTA) 73.98 138.77

Less: Interest (including bank &

finance charges) 43.39 55.36

Depreciation 87.01 87.94

Profit/(Loss) before tax (56.42) (4.53)

Less: Exceptional items 16.19

Tax expense/(benefit) (14.81) 2.98

Profit/(Loss) for the period (41.61) (23.70)

Change of Name

The name of your Company has been changed from The

Andhra Pradesh Paper Mills Limited to International Paper

APPM Limited with effect from December 16, 2013

following issue of fresh Certificate of incorportion

consequent upon change of name dated

December 16, 2013.

Performance of the Company

Your Company adopted the following strategic principles:

a. Become the low cost producer;

b. Customer support excellence;

c. World class operat ions & focus on safety,

environment and productivity;

d. Optimize footprint to grow in printing and writing

segment.

During the financial year ended March 31, 2014, the

Company continued to execute initiatives focused on these

principles. These initiatives will continue to create long

term value for our stakeholders and help position yourCompany as a leading supplier of premium grade products

in the Indian market.

The past two years have witnessed significant challenges

for the paper industry in India. A soft economic

environment, combined with significant escalations in fiber

costs, depreciation of the rupee (versus the US Dollar)

and inflation has resulted in cost headwinds which have

been challenging.


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April 22, 2014 noted the provisions of the above mentioned

Circular of Ministry of Corporate Affairs and passed the

necessary resolution granting the requisite approval for not

attaching copies of the accounts of IP India Foundation

subject to complying with the provisions of the said Circular.

The Company undertakes that annual accounts of IP India

Foundation and the related information will be made

available to the shareholders holding Company seeking

such information at any point of time. The annual accounts

of IP India Foundation will be available on the Company's

website www.ipappm.com and will also be available for

inspection by any shareholder at the Registered and

Corporate Office of the Company.

The Company made an investment of `5 lakhs by way of

share capital in IP India Foundation, a Section 25 company

under the Companies Act, 1956 wherein the excess of

income over expenditure will be applied for promoting its

objectives. Accordingly, the accounts of IP India

Foundation are not consolidated since the holding

Company will not derive any economic benefit from its

investment in IP India Foundation.

Raw material procurement

Your Company's concerted efforts, in stiff competitive

environment, has been able to meet 100% requirement

of pulpwood from local farmers and was able to source

major part of raw material primarily within 350 kms radius

within Andhra Pradesh.

During the last year, 204.8 million quality saplings (around

27% increase over the last year) were distributed coveringan area of 28,019 hectares under plantation, as against

development and distribution of 161.30 million seedlings

covering an extent of 22,975 hectares during the previous

2012 planting year. Research on clonal development has

resulted in introduction of high yielding, disease resistant

clones and versatile to a wide variety of agro-climatic

conditions in inland and coastal areas.

Research and Development has been taken at a wider

perspective through a collaborative project with Institute of

Forest Genetic & Tree Breeding, Coimbatore, Tamilnadu.

We are introducing more farmer-friendly demonstration

plots and other cost reduction measures in qualitative and

quantitative production processes. In addition, the

initiatives with high yielding, short rotation planting stock

will enhance raw material availability, spread over 1,84,000

hectares. These have created a pool of about 91.75 million

man-days especially in rural areas, so far.

Future plan of action

Keeping in view of growth in fibre demand, additional thrust

on enhancing area under farm forestry and selecting

second generation Casuarina clones will be given, which

will help the farmers to achieve higher yield per acre than

the existing Casuarina clones, ultimately resulting in better

returns to farmers and additional fiber to the Company

from the same area.

Awards/certifications

Your Company received 'Special Export Award' for

2011-12, in recognition of its achievement in respect of paper

and paperboard, as export sale increased by 19.14% as

compared to the previous financial year 2010-11. The award

was presented on December 26, 2013 by Dr. E.M.

Sudarsana Natchiappan, Hon'ble Minister of State for

Commerce and Industry, Government of India, at the

export award presentation function organized by CAPEXIL

at Kolkata.

Corporate Social Responsibility

As a responsible corporate citizen, the Company has beenfocusing on different Corporate Social Responsibility

activities such as education, empowerment, environment

and employee engagement to help the communities in

and around Rajahmundry.

The following CSR activities were undertaken by the

Company directly or through IP India Foundation during

the year under review:

a. Continued distribution of solar lamps to the students

of Zilla Parishad high schools in the farm forest areas

which enable the students to study during power cut

time, with an overall improvement of pass percentagefrom 79% to 92%.

b. Provided vocational training to the women in

Mallayyapeta.

c. Imparted training to the disabled children in candle

making, paper bags etc.

d. Provided safe drinking water through tanks to the

residents in and around the Mills.

e. Provision of improved facilities at nurseries towards

protection of employment.

f. Organized blood donation camps, health andmotivation awareness, events/lectures.

g. Encouraging rain water harvesting in Zilla Parishad

high school premises filled during plantation.

h. Providing drinking water facilities, lights and fans,

furniture and books to the government schools.

i. Provided support for construction of check dam at

Tantikonda Village which would help the farmers to

store the rain water.


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IT Initiatives

Salesforce

During the year, your Company implemented a new

Customer Relationship Management system in

partnership with Salesforce.com. Salesforce.com is a

cloud computing and social enterprise Software-as-a-

Service (SaaS) provider. The new system will enable salesand marketing to have better lead management, gain

visibility of current opportunity, manage large key accounts

and enable better relations with dealers. Complaint

tracking (CTS) process is more streamlined. Introduced

block scheduling concept as part of S&OP process which

provides probable dispatch date to the customer and

improves machine efficiency.

Helpdesk

Centralized Helpdesk was launched in India on

November 6, 2013. This is in line with International Paper's

support model in US and Poland. India is the only countryafter US and Poland to launch a full scale helpdesk system

with all three groups of ITSS (Customer support, remote

support and regional support). Helpdesk enables end

users to raise tickets on MyhelpIN (web interface tool) or

by calling on phone support that is available 24X7 which

can be reached from anywhere, at any time.

HR initiatives

Undertaken the task of ensuring efficient, effective

and scalable core processes and systems across the

organization through project GPS (Global Processes

and Systems); Introduced career and development worksheets

(CDW) as mandatory across the senior staff of the

organization to ensure career management and

succession planning. All career movements to be

made based on CDWs;

Introduced performance assessments to the junior

staff of the organization in Kadiyam mills;

Encouraged individual contributions by introducing

variable pay across the senior staff of the organization;

Introduced mandatory one-on-ones between

managers and employees as an outcome of theGlobal Employee Engagement Survey;

Reviewed and updated policies that include like

domestic travel, international travel, credit card policy,

dress code, substance abuse, rehire and separation,

relocation, etc.

Continue to focus on developing young and aspiring

leaders for week long training at the Leadership

Institute, USA.

Industrial relations at Rajahmundry and Kadiyam Mills

The Company had signed settlement under Section 12(3)

of Industrial Disputes Act effective from July 1, 2012 with

the recognized unions of Unit: Kadiyam in April, 2013.

At Unit:Rajahmundry earlier wage settlement expired on

June 30, 2013. The recognized union has submitted

charter of demands and bilateral negotiations are under

process.

The overall IR climate at both mills is collaborative.

Particulars of conservation of energy, technology

absorption and foreign exchange earnings and outgo

Particulars of conservation of energy, technology

absorption and foreign exchange earnings and outgo as

required under Section 217 (1) (e) of the Companies Act,

1956, read with the Companies (Disclosure of Particulars

in Report of the Board of Directors) Rules, 1988 are given

in the Annexure - I attached and forms part of this Report.

Particulars of employees

The information required under Section 217 (2A) of the

Companies Act, 1956 and the Rules made there under is

provided in the Annexure - II forming part of the Report.

However, as per the provisions of Section 219 (1) (b) (iv)

of the Companies Act, 1956 the Annual Report excluding

the aforesaid information is being sent to all the Members

of the Company and others entitled thereto. Any Member

interested in obtaining, such information may write to

Company Secretary at the Registered Office of the

Company.

Public deposits

Four deposits totaling `1.45 lakhs due for repayment on

or before March 31, 2014 were not claimed by the

depositors as on that date. Three deposits aggregating to

`0.80 lakhs were repaid during April, 2014. During the

year under review, there was no unclaimed deposit amount

which is required to be transferred to Investor Education

and Protection Fund.

The provisions of Section 58A of the Companies Act, 1956

have been complied with.

Auditors

Messrs Deloitte Haskins & Sells, Chartered Accountants,

Hyderabad, Auditors of the Company will retire at the

conclusion of the ensuing Annual General Meeting and

have confirmed their eligibility and willingness to accept

office, if re-appointed.


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Directors

During the year under review, Mr. Brett Allen Mosley

resigned from the Board with effect from February 28,

2014.

The Board placed on record its appreciation for the

valuable advice and guidance received from Mr. Brett Allen

Mosley during his tenure as Director.

The Board appointed Ms. Shiela P. Vinczeller as Additional

Director with effect from March 31, 2014. She will hold

office upto the date of ensuing Annual General Meeting.

The Company had received requisite notice in writing

under Section 160 of the Companies Act, 2013 proposing

her candidature.

Mr. Thomas G. Kadien shall retire at the forthcoming

Annual General Meeting and being eligible, offered himself

for re-appointment.

Independent Directors

Section 149 of the Companies Act, 2013 (effective April 1,

2014) provides that Independent Directors shall hold office

for a term of five consecutive years and shall be eligible

for re-appointment on passing a Special Resolution by

the Members of the Company. Therefore, your Directors

are seeking appointment of Mr. M.S. Ramachandran,

Ms. Ranjana Kumar, Mr. Praveen P. Kadle,

Mr. M.K. Sharma, Mr. Adhiraj Sarin and Mr. Milind Sarwate

as Independent Directors for five years for a term up to

March 31, 2019. The details of the proposal for

appointment of these Independent Directors are

mentioned in the Explanatory Statement under Section

102 of the Companies Act, 2013 to the Notice of 50th

Annual General Meeting.

Cost Auditors

In terms of Section 148 of the Companies Act, 2013, the

Board at their meeting held on April 22, 2014 appointed

Messrs Narasimha Murthy & Co., Cost Accountants as

Cost Auditors of the Company at a remuneration of `5.85

lakhs (excluding service tax) plus reimbursement of

travelling and out of pocket expenses on the

recommend

Annual Report Deluxe Copy 2013-14

Documents